BargainMatch and Investor’s New Appetite for Coupon Services
One of the things we believe is most overlooked about Inuvo and its Bargain Match service is the coupon component. Certainly, much of the sizzle relates to its ability to notify consumers of cash back opportunities at over 1900 merchants and do so without changing the flow of their shopping patterns (ie by just putting the little green sale tag beside each website in your Google search results that offers cash back), but Bargain Match is also one of the most comprehensive resources for coupons online. Mouseover that little green tag in the search results and you will see not only what % cash back they offer, but also all of the coupons that merchant offers to online shoppers. For instance, when I entered the term “iphone accessories” into my Google search engine, 6 of the 10 websites on the Google results page offered the little green tag and when I mouseover the green tag, I can see five or six different coupon offers each from the official Apple Store, Best Buy, At&t, Buy.com, CellPhoneShop.net, etc. and it has a simple “click to activate” button beside each one that will take you to the site, where one more click will apply the coupon code to your shopping cart. I clicked through on the “CellPhoneShop.net” website and the coupons allowed me to get $10 off my $50 order in addition to applying 13% cash back to my BargainMatch (or ALOT Cash Back Rewards for Appbar users) account. The price on the items were actually better than at my local At&t store for the same items before the discount and it included free shipping, so it is a win-win-win deal for the consumer. With over 1900 merchants including almost every major retailer you can think of, the Bargain Match service essentially offers the best coupon site online in addition to the cash back feature it is best known for.
One of the reasons I chose to focus on the coupon aspect of the Bargain Match service is not the recent “return of the coupon” to widespread consumer consciousness that could be attributed to the difficult economy or perhaps to the proliferation of the daily deal sites like Groupon, Living Social and Kowabunga (yeah, thats right), rather we have chosen to call it to your attention because of the investment community’s recent and growing fascination with coupons. Within the last 30 days, the following funding deals have grabbed our attention –
1) Coupons.com – earlier this month raised $30 million from highly regarded VC Greylock Partners, on top of the $200 million raised in June. The valuation on these placements puts the company’s enterprise value in excess of $1 billion
Link – http://www.businessinsider.com/coupons-com-billion-dollar-valuation-2011-6
2) CouponCabin.com – last week Coupon Cabin raised $54 million from venture capitalists. While we have not been able to verify the total valuation, we do know that the $54 million investment was for a minority stake, so the implied valuation for this round would be in excess of $108 million.
3) CouponTrade.com – 2011 startup received $2.4m funding earlier this month – http://www.portfolio.com/views/blogs/daily-brief/2011/10/20/coupon-cabin-grabs-54-million-in-funding
4) Coupon Express – just this week a Pink Sheets listed company that just changed its name from PSI Corp completed a convertible issue raising another $1.5 million that appears to push their enterprise value to $12m+
We note the first two deals as indicators that big VC money has recently warmed to the potential value of web based coupon offerings. We offer the last two as examples of startups and/or “me too” companies jumping on the coupon bandwagon that already have valuations that exceed the entire current market cap of Inuvo. While three of the four companies above are a slightly different kind of couponing service (grocery store or daily deal focused),we note that the deals offered on the $100m+ valuation CouponCabin are in many cases the same deals offered through BargainMatch, except that Coupon Cabin does not offer the cash back component on top of the coupons that BargainMatch offers. Certainly, Coupon Cabin has one key advantage in that it has been around since 2003, while the BargainMatch service has only been around for about a year and the browser extension has only had a few months to build up its user base. Given time, exposure and better distribution; we believe that the high consumer value and utility of the BargainMatch service could allow it to be one of the leaders in the coupon space, generate significant revenue (Q4 will be first full quarter of BM browser extension) gains for Inuvo and hopefully gain some recognition among investors of the potential value of this company.
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